Tax Strategy 4: Save tax by deducting assets of less than $20k

30/01/2017

If your business turnover is less than $10 million per year, you can write off the purchase price of assets costing less than $20,000 immediately, rather than depreciating these assets at standard rates. This tax incentive was due to expire on 30 June 2017. However, in the May 2017 Budget, it’s been proposed to extend for another one year.

Immediate write-off thresholds

01/07/2017 to 30/06/2018 (not yet legislated)

$20,000

Current threshold from 7:30pm AEST 12/05/2015 to 30/06/2017

$20,000

01/01/2014 to prior to 7:30pm AEST 12/05/2015

$1,000

01/07/2012 to 31/12/2013

$6,500

01/07/2011 to 30/06/2012

$1,000

The small business simplified depreciation pool will apply to assets costing more than $20,000. These pooled assets are depreciated at a rate of 30% diminishing (15% in the year purchased).

Sasi’s Tip 1: Review your business plan for 2017/2018 and identify whether your business requires any assets like machinery, motor vehicles or furniture which individually cost less than $20,000. If your cash flow allows, consider making these purchases before 30 June 2017 and get the full tax deduction benefits in 2017.

Sasi’s Tip 2: If you’re not using a simplified depreciation pool, review your depreciation schedule to be sure there are no items that could be removed, no longer exist or are no longer in use. The book value of these obsolete capital items can be written off, which will increase your tax deduction in 2017.

The information provided above is general in nature and does not constitute financial advice.
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